Thougts on a Possible Microsoft Purchase of Yahoo
A few days ago I posted
Could Microsoft Buy Yahoo? - Seven Reasons it Could Happen!
I posted about it at The Search Engine Watch Forum and this was the response one poster had. I found it interesting and from a clearly informed party so I though I would share it here.
“MSFT could easily buy Yahoo. Yahoo has a market cap of roughly 45 bil. and MSFT has 34 bil. in cash.
Give YHOO a 50 percent premium and you have roughly 67 bil. price tag.
MSFT will not give up all their cash to secure YHOO but they could easily put up 20 bil. and float some stock to secure a deal.
They would approach 30 percent of search and would have enough cash left to outbid Google by giving 100 percent of publisher share on content search.
In a protracted war Google would lose. Their share price would fall, institutions would pull their investments and Google would be forced to issue more shares just to keep itself funded.
That being said I don’t think Gates has another war in him.”
The poster identified himself only by the handle “webvisitor” so at this time I can’t credit him any better then I have done here. I found two things to be the most interesting about his commentary.
1. The math behind the fact that the buyout could happen. I mentioned this in my post, however he broke it down to specifics to demonstrait exactly how it could be done for above par market value.
2. More interesting his comments on the effect it would have on Google. I of course had thought of how it would effect the search landscape but what I really had not pondered is the effect it would have on Google stock, given how high it is currently trading.
On his last comment, “That being said I don’t think Gates has another war in him”, I personaly don’t feel that while he may be right that it has too much of an influence on if there will be a “war” or not. Bill has plenty of Generals and Soliders to fight any wars for him. Besides if Microsoft didn’t want a search market share war they wouldn’t be in the game at all.
Jack Spirko